Topshop franchise fees may have triggered local downfall

The franchises fee paid to Topshop UK by the local retail outlet, set up by a license agreement, may have triggered the downfall of the UK brand in Australia.

In the latest Money News segment on radio station 2GB, money commentator Ross Greenwood said the local licensee, Hilton Rescan, pays a fee to Topshop UK and buys goods from it which adds cost to consumers and the local operator.

"By contrast, Uniqlo and H&M are owned by their global parents – there is no middleman  – costs are lower, and if they choose cheaper prices can be passed on," he said.

"But many Australian retailers are struggling to survive because they’re not set up that way."

Sean Sands, associate professor of ‎ACRS Research Unit, said the local outlets run their own infrastructure and own cost locally while picking from the Topshop UK product range.

Ferrier Hodgson were appointed voluntary administrators of Topshop/Topman.

The retailer has 760 employees and annual sales of approximately $90 million.

Administrator James Stewart told the Daily Telegraph the company would continue to trade as normal while he works closely with Topshop/Topman’s UK owners Arcadia Group to figure out next steps.

Topshop and Topman are brands of British retailer Arcadia Group. Topshop/Topman is a separately owned and operated Australian franchise.